European markets mixed

A host of company results, many beating expectations, gave some support to stock markets but weaker than forecast US GDP took some of the shine off shares. So European markets ended the day in a rather mixed fashion. Here are the closing scores:

• The FTSE 100 finished up 10.12 points or 0.15% at 6780.03

• Germany's Dax added 0.2% to 9603.23

• France's Cac closed down 0.23% at 4487.39

• Italy's FTSE MIB fell 0.88% to 21,783.38

• Spain's Ibex ended down 0.02% at 10,459

In the US, the Dow Jones Industrial Average is currently up 0.08% or 13.52 points.

And on that note, it's time to close up for the evening. Thanks for all your comments, and we'll be back tomorrow.

The US economic recovery slowed to a crawl in the first quarter of 2014 as a frigid winter appeared to have taken its toll on business, writes Dominic Rushe:

The Commerce Department announced Wednesday that gross domestic product (GDP), the broadest measure of the value of goods and services, increased by a seasonally adjusted annual rate of just 0.1% in the first quarter. Economists had been expecting growth of closer to 1%.

The figures represent the Commerce Department’s first take on GDP for the three months from January to March and will be revised as more information becomes available. They come as the Federal Reserve ends its two-day meeting amid expectations that it will make further cuts to its massive bond-buying economic stimulus programme, known as quantitative easing.

Capital Economics’ chief US economist Paul Ashworth had been expecting growth of around 1.2%. He said the gap between the forecasts and the surprisingly weak figure was principally due to the impact of the winter’s severe weather, an unexpected 5.5% decline in investment in equipment and the complete absence of any rebound in government spending after the federal shutdown in the fourth-quarter of last year.

Advisor Lazard sold Royal Mail shares in first week

Lazards, who advised the govt on the sale of Royal Mail, got shares int he flotation and sold them all in the first week, at huge profit.

Earlier Lazard was asked whether it was appropriate that its asset management arm received 6m of the 13m shares for initial investors, when Lazard was an advisor. Chief executive William Rucker says when it was appointed it was unaware Lazard Asset Management has previously had discussions with Royal Mail. He added:

When we learned this, we made it clear we should have no discussions about allocations.

Royal Mail advisors at Public Affairs Committee Photograph: Parliament TV

Ahead of next week's European Central Bank meeting there has been much speculation as to whether it will sanction a rate cut or even quantitative easing.

But according to a report on Bloomberg, ECB president Mario Draghi believes a QE programme may not be needed in the near term:

Draghi told German lawmakers that a quantitative-easing program isn’t imminent and is relatively unlikely for now, according to a euro-area official present at the meeting.

The central bank stands ready to embark on QE if needed, Draghi said at the gathering attended by lawmakers from parties that form the nation’s coalition government, the official told reporters yesterday. The person declined to be identified because the meeting in Koenigswinter, Germany, was private.

Draghi has said he is considering unprecedented measures from negative interest rates to QE to avert the risk of deflation as he guides the euro area through a gradual economic recovery. Government and central-bank officials in Germany, the region’s largest economy, have been among the strongest opponents of his more radical policies amid concern the ECB will overstep its mandate.

Ahead of the latest Public Accounts Committee hearing on the Royal Mail, Vince Cable has released the names of the 16 priority investors in the company's flotation. They are:

Abu Dhabi Investment Authority

BlackRock

Capital Research

Fidelity Worldwide

GIC

Henderson

JP Morgan

Kuwait Investment Office

Lansdowne Partners

Lazard Asset Management

Och Ziff

Schroders

Soros

Standard Life

Third Point

Threadneedle

Cable said the 16 gave the government the confidence to launch the float and were later allocated shares:

I told the BIS Select Committee yesterday I wanted to be as helpful and transparent as possible. In that spirit I had already provided the names to the National Audit Office and yesterday I provided the list in confidence to the chairs of the BIS Select Committee and the Public Accounts Committee. I had been advised that the investors expected confidentiality around their share acquisitions but there has been strong interest in who the investors are and speculation around the names, some of it inaccurate. I have decided the public has an interest in an accurate list being available.

There was controversy as some of the initial investors sold out almost immediately, making huge profits as the shares soared 38% on the first day of trading.

The weak US GDP figure is unlikely to dissuade the Federal Reserve from continuing to taper its bond buying programme. The Fed will unveil its latest decision later, but is expected to cut its stimulus measures by another $10bn. Rob Carnell at ING Bank said:

US first quarter 2014 GDP was a disappointment if you focus solely on the headline figure. But the market was already geared up for weakness given awful first quarter weather (consensus was for about 1.0%) and the real excitement this week will be today’s FOMC decision and Friday’s payrolls.

This is history, and tells us little about the underlying state of the US economy. In fact, the second quarter will most likely see a decent bounce from this weakness, even though headline forecasts for 2014 are likely to be revised down as a result of this poor start. We may now be looking at something a shade below 3.0%.

We don’t expect the [Fed] will care about this GDP figure very much, and look for the $10bn taper to proceed along its previous path at today’s meeting.

US economy grows just 0.1%

The US economy barely grew at all in the first three months of this year.

The Bureau of Labour Statistics just reported that GDO rose by just 0.1% in the first quarter, on an annualised basis (so jus 0.025% in quarterly terms).

That's the weakest reading since the last quarter of 2012, and much worse than economists had expected , even allowing for the impact of the bad winter weather. The concensus was for growth of 1.2% annualised, (or 0.3% on a quarterly basis)

S&P economist Sophie Tahiri said house prices appear to be stabilising across Europe, warning:

"But a recovery is still some way off for some markets in the eurozone that were worst affected by the economic downturn, such as Spain, Portugal, and Italy, amid still tight credit conditions and high household debt,"

S&P predicts UK house prices will rise by 7% this year as the "impressive upturn" continues, but will cool when the Bank of England raises interest rates next year

It also believes German house prices will rally this year too...

with prices rising by 4.5% on average this year, backed by low unemployment, rising consumer confidence, and increasing immigration. We nevertheless see no prospect of a housing bubble since price rises have occurred from a fairly low base.

The Bundesbank has recently expressed concern over rising German housing prices.

Britain's defeat in the European Courts of Justice over the eurozone Robin Hood tax this morning (details here) has been welcomed by tax campaigners, but attacked by UKIP.

David Hillman, spokesperson for the Robin Hood Tax campaign, says the UK should never have tried to block a European Financial Transaction Tax, arguing:

"George Osborne has gone to Europe to bat for the bankers, but he's been bowled first ball.

"This futile legal challenge tells you all you need to know about the Government's misguided priorities: it would rather defend a privileged elite in the City than support a tax that could raise billions to tackle poverty and protect public services.

"Instead of trying to stop other countries taxing their financial sectors, our Government should follow their lead, stand up to vested interests and harness the City's excessive wealth for the wider benefit of society.

"Complaining that the City will be hit by a European FTT is a clear case of double standards - almost half of the £3bn revenue from our own FTT, the stamp duty on shares, comes from non-UK residents."

While UKIP chief Nigel Farage took the opposite line - blasting the "antagonistic federalist" ECJ:

"It shows Cameron's argument that the UK government can negotiate a better deal for British business from within the EU as a fraud and a farce. The only way to protect the UK financial interest is to withdraw from the tax-hungry EU and stop giving Brussels power over us.

Ireland's jobless rate has fallen to its lowest level in five years, dipping to 11.7% this month from 11.8% in March.

The Central Statistics Office reported a 3,400 drop in the number of people claiming unemployment benefit.

It's the 22nd consecutive fall, down from the record high of 15% in 2002.

Photograph: Ireland's Central Statistics Office

Merrion economist Alan McQuaid said that more jobs were being created as Ireland's economy improves, although emigration from the country - which completed its three-year bailout programme last December - also pushed the jobless rate down.

Firstly if I can ask you to take a journey in Dr.Who’s TARDIS and “Step Back in Time” as Kylie Minogue has suggested then a decade or so ago economic literature was full of articles suggesting that the UK labour market needs to become more flexible.

As this is an example of that we are left wondering if this is an example of the aphorism “Be careful what you wish for!”

He also flag ups up that zero hours employees are more likely than average to be doing less work then they'd like:

What is needed now is much research into the wages area I think so that as well as quantity of work we find out at what price it is being carried out. Frankly we still know much too little about this area. Fortunately some of the worst scaremongering has turned out to be mostly untrue but that does not mean that everything is as it should be.

“These shocking figures show that since David Cameron became Prime Minister, there has been huge increase in the number of people on zero hours contracts. It is staggerin​g illustration of the cost-of-living crisis under this Tory led Government and a reminder that David Cameron and George Osborne are failing to deliver a balanced recovery that works for all.

“Labour is clear that we will outlaw zero-hours contracts where they exploit people, ensuring that people at work are protected and get a fair deal. It's time the Tory-led government matched our plans.”

Unite general secretary Len McCluskey said these contracts trap people in a world of insecure, low paid work, where "your future income is dependent on the whim of your boss".

“It is clear that that workers in the UK need stronger legal protection – not less as the government claims – to protect them against abuses. They need legal rights to challenge abuses and not be charged £1,200 to take a case to an employment tribunal.

“It is time for ministers to take action and ensure that all goods and services that government departments procure should be from outside organisations and companies that don’t use zero hours contracts.

TUC General Secretary Frances O’Grady says that zero hours contracts are more endemic across the UK economy than previously admitted.

“Insecure work with no guarantee of regular paid hours is no longer confined to the fringes of the jobs market.

“It is worrying that so many young people are trapped on zero-hours contracts, which can hold back their careers and make it harder to pay off debts like student loans. The fact that these contracts have become the norm in tourism, catering and food will be a major concern for the millions of people employed in these industries.

“With a further 1.3m workers reportedly doing no work at all, the jobs market is far more precarious than the government would have us believe. This should spur ministers into action to crackdown on the abuse of zero-hours contracts by employers.”

Recent TUC research also found that a majority of those on zero-hours contracts are paid less than the living wage.

The number of UK jobs offered on zero-hours contracts is 1.4m, according to the latest government figures, a far higher number than expected.

A snapshot survey of employers by the Office for National Statistics, taken from a two week period between late January and early February, showed the trend for hiring staff without guaranteeing a minimum number of hours is more prevalent than initially thought.

Following an earlier survey of employees, the ONS had previously estimated that 583,000 people were employed on zero hours, suggesting that some people have more than job on a zero-hours basis.

After an early dip, though, the euro is rallied a little - suggesting traders don't expect a rate cut soon.

Martin van Vliet of ING argues the ECB will hold rates at its next meeting. He writes:

The lower-than-expected Eurozone inflation reading for April will fuel speculation of further monetary easing by the ECB at next’s week policy meeting. However, we doubt whether the ECB will pull the trigger just yet.

Eurostat’s “flash” estimate came in at 0.7%, slightly below the 0.8% consensus, but still 0.2ppt higher than in March. The bounce in inflation was partly due to less negative energy price inflation (-1.2% versus -2.1%), but also reflected a sharp increase in the core rate, from 0.7% to 1.0%. Food, alcohol and tobacco inflation eased from 1.0% to 0.7%.

The sharp increase in core inflation can be largely blamed on the impact from the timing of Easter. With Easter falling in March last year, but in April this year, the annual rate of change in holiday-related prices was abnormally low last month, and abnormally high this month. Excluding this effect, overall inflation would have been stable at 0.6% in both March and April.

ONS: 1.4m zero-hours contracts in UK

The true scale of Britain's zero-hours culture has been exposed, with an official survey finding 1.4 million contracts that don't guarantee a minimum amount of paid work each week.

That's more than twice as many as previously estimated by the UK's statistics body, which hadn't examined the situation in detail until today.

The Office for National Statistics has reported that almost half of all firms in tourism, catering and food sectors use "non-guaranteed hours contracts", which have been criticised for leaving people without a guaranteed income.

Around 13% of UK firms use them, including one in five health and social work firms, it said.

Larger employers were much more likely to use zero-hours contracts than smaller ones, the ONS said -- with almost half of businesses with 250 or more employees make some use of NGHCs.

Today's figures are based on a two-week survey of the labour market, in late January and early February 2014.

Zero-hours contracts has been a big issue in the last year, sparked by a big Guardian investigation into the situation.

Until today, the only official estimate was that 583,000 people were on zero-hours contracts.

Quite a rise in the ONS estimate of Zero Hours Contracts! "1.4 million employee contracts that do not guarantee a minimum number of hours,"

As well as the 1.4m zero-hours contracts, the ONS found "evidence of a further 1.3 million contracts where no work was undertaken". That might mean there are more than 1.4m on zero hour contracts, it added.

Update: Some people will have signed up for more than one zero hours contract each, so this isn't strictly a measure of the number of people working them - although it's probably pretty close.

It reported this morning that annuity sales have halved since March's Budget, suggesting many people plan to use their savings for other investments. Or even a Lamborghini....

Standard Life's chief executive David Nish has criticised the way the changes were announced -- a classic 'rabbit out of a hat' moment at the end of the chancellors speech, my colleague Julia Kollewe reports:

Nish said: "The changes are very important and in many ways very positive for customers." But he criticised the way they were announced, which he said gave customers the sense that annuities were not worth having.

People with pension pots worth less than £10,000 were withdrawing their money, while those with larger pension pots are deferring the decision, Nish adds.

George Osborne's attempt to block European countries introducing a financial transaction tax has just been rejected by the European Court of Justice.

Europe's top court slapped down the chancellor's efforts to block the FTT, or Robin Hood tax -- which would impose a small levy on various financial trades.

Britain had asked the ESJ to rule against 11 countries who have agreed to implement the FTT. But the ECJ refused, saying that it would not block a tax that had not actually been agreed yet.

In a statement, it said:

"The Court dismisses the United Kingdom's action,"

"The Court finds that the contested decision does no more than authorise the establishment of enhanced cooperation, but does not contain any substantive element on the FTT itself."

Britain's government fears that the FTT will hit trading in the City, even though the UK is not signing up to the scheme. Supporters, such as France, argue that it will help dampen financial speculation - and raise billions in revenue.

It's another dark day for Britain's battered Co-operative Group, as the official report into the crisis at its Bank is published.

The 152-page report by Sir Christopher Kelly, a former civil servant, confirms that Co-op Bank's takeover of Britannia Building Society was a serious blunder, leading to its near collapse.

As City editor Jill Treanor reports:

Concluding that the landmark merger with Britannia in 2009 should probably not have taken place, Kelly also expresses surprise that the Co-op Bank attempted to take over 632 branches being sold by Lloyds Banking Group, a deal that was codenamed name Project Verde.

The much-anticipated report, which cost £4.4m, is likely to make painful reading for former and some current members of the boards of both the Co-op Group and Co-op Bank, as Kelly makes plain they need to take responsibility for the bank's problems.

But it may come as a relief to the politicians on all sides of the spectrum who have been dragged into the affair, as Kelly finds no evidence of interference on either the Britannia deal or the Verde transaction.

Spain's statistics body confirmed this morning that the Spanish economy is growing at the fastest pace in six years.

Spanish GDP rose by 0.4% in the first three month of this year - in line with the Bank of Spain's estimate last week. And on a year-on-year basis, the economy is 0.6% bigger - a little larger than expected.

World Bank: China economy poised to overtake America

Good morning, and welcome to our rolling coverage of events across the world economy, the financial markets, the eurozone and business.

A hugely busy day lies ahead -- starting with the news overnight that China's economy is larger than previously thought, and poised to overtake the US as the world's largest economy this year.

The International Comparison Program (ICP), conducted with the World Bank, has updated its estimates of the purchasing power of money in countries across the globe (a hefty task). These new purchasing-power parity figures show that America's dominance as the world's most powerful economy since the late 19th Century is almost over.

It's the first time since 2005 that the World Bank has updated its estimate of the real living costs around the world -- which show economic strength without the confusion caused by market exchange rates.

Today's new figures paint an interesting new picture of the world economy - including the news that China's PPP is actually 20% higher than earlier thought.

That means it was 87% the size of America's economy in 2011 -- and given its strong growth since, China is on track to overtake the US this year.

World Bank PPP index, April 2014 Photograph: /The Economist

The new figures also show that India has overtaken Japan to become the world's third largest economy:

As the ICP explains:

"The United States remained the world's largest economy, but it was closely followed by China when measured using PPPs. India was now the world's third largest economy, moving ahead of Japan," the report said.

"The results indicate that only a small number of economies have the greatest shares of world GDP. However, the shares of large economies such as China and India have more than doubled relative to that of the United States."

Photograph: World Bank

The PPP measure isn't a perfect measure of economic power. For example, it doesn't consider the size of each country's population -- on a per capita basis, China languishes down the ranks. And in US dollar terms, America's economy is still the largest by some distance.

The findings will intensify arguments about control over global international organisations such as the World Bank and IMF, which are increasingly out of line with the balance of global economic power.

When looking at the actual consumption per head, the report found the new methodology as well as faster growth in poor countries have “greatly reduced” the gap between rich and poor, “suggesting that the world has become more equal”.

But still -- the world’s rich countries account for 50% of global GDP, while containing only 17% of the world’s population.

Reaction to follow.

Loads of other stuff afoot too today -- including the latest GDP figures from America (1.30pm BST) and Spain (just out! - +0.4% in Q1), the official report into the failings at the Co-op Bank, and new inflation data from the eurozone (10am BST).

There's also financial results from a swath of companies -- including Shell, Next, and Standard Life.Better crack on...